FHA Loans

The FHA loan may be a great option for first-time homebuyers, because it is insured by the Federal Housing Administration (FHA), and can provide borrowers with more flexible underwriting guidelines as compared to a conventional loan program.  The federal government insures these loans for FHA-approved lenders in order to reduce the lender’s risk of loss that results if a borrower defaults on their mortgage payments. Typically a borrower can be approved with as little as 3 1/2% down vs 5% or more down often required for a conventional loan program. Interest rates for this type of loan tend to be quite aggressive, but an FHA loan also requires up-front mortgage insurance (can be financed into the new loan), and annual mortgage insurance (paid monthly).